Stock Analyst Note
Teradyne Earnings: Market Selloff Overblown After Positive Results
We maintain our $135 fair value estimate for shares of wide-moat Teradyne as we believe our long-term thesis is bearing out following second-quarter results. Most of Teradyne’s end markets remain soft in 2024, including its bellwether smartphone chip testing market, which has been depressed since 2022. We believe many of these markets will turn up in 2025, and continue to model a strong two-year recovery through 2026. Teradyne has seen positive results in 2024 from AI chip investment, particularly from memory and networking customers. This AI demand drove revenue above our expectations in the second quarter. Shares sold off as much as 15% following results, which we attribute to an overreaction to third-quarter guidance implying a modest sequential sales decline. We see shares as fairly valued.